Although the current economic system is far from flawless, solid monetary policy has solidified the global economy in the wake of the Great Recession.
Low rates stimulated corporate expansion / output while stabilizing the financial institutions.
Although economic slowdowns are painful, the process tends to redistribute useful resources from less to more-productive enterprises / sectors.
New technologies lead to key innovation, greater productivity and a highly efficient business environment.
Now that the economic vessel is no longer taking on water, policymakers are reversing the process, lowering rates, decreasing QE operations.
Three key economic threats are facing the global economy, Quantitative Tightening (QT), higher real rates, and a global trade war.
Economic history shows that tariffs rarely bode well in the long-term for countries that adopt the sanctions.
Fiscal policy tends to attract rent-seeking behavior, line the pockets of political allies and do little to improve overall economic welfare.
The tariff dilemma creates a new inflation wild card for global monetary policy, as taxes are intrinsically inflationary, resulting in higher prices across multiple economic segments.
Bob Hoye of Institutional Advisors returns with his latest market insights. The new trade tariffs on Canadian lumber this January pushed the mean new home price higher by over 10% as a direct result. Although the current economic system is far from flawless, solid monetary policy has solidified the global economy in the wake of the 2008-2009 Great Recession via low rates, which stimulated corporate expansion / output while stabilizing the financial institutions. Although economic slowdowns are painful, the process tends to redistribute useful resources from less to more-productive enterprises / sectors, resulting in economic profits above typical normal-profits. New technologies lead to key innovation, greater productivity and a highly efficient business environment. Now that the economic vessel is no longer taking on water, policymakers are reversing the process, lowering rates, decreasing QE operations to prevent uncontrollable inflation from capsizing the ship. Three key economic threats are facing the global economy, Quantitative Tightening (QT), higher real rates, and a global trade war. Economic history reveals that tariffs rarely bode well in the long-term for countries that adopt the sanctions as Fiscal policy tends to attract rent-seeking behavior, line the pockets of political allies and do little to improve overall economic welfare. In addition, the tariff dilemma creates a new inflation wild card for global monetary policy, as taxes are intrinsically inflationary, resulting in higher prices across multiple economic segments.
Figure 1.1. Toccata "Dorian" BWV 538 Johann Sebastian Bach ( 1685 - 1750 ) - Luciano Zecca
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Figure 1.2. Beethoven, Symphony 9, 2nd movement (complete), Molto vivace, Philharmonia Baroque - Develop Synesthesia & View The Music!
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Figure 1.3. Bach, Double Violin Concerto in D Minor, 3rd mvt. BWV 1043 - Develop Synesthesia & View The Music!
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Figure 1.4. Vivaldi, Winter, Four Seasons (Allegro), US Air Force - Develop Synesthesia & View The Music!